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“Risk — let’s get this straight up front — is good. The point of risk management is not to eliminate it [but] to manage it… to choose where to place bets and where to avoid betting altogether.” “Managing Risk in the 21st Century,” Thomas A. Stewart, Fortune, 7 February 2000

All too often, efforts in risk management are dispersed, isolated and unrelated to the wider company strategy. Many organizations would benefit greatly from a more comprehensive and integrated risk management approach that takes into account strategic, operational, financial and compliance risks.

Linking the key risk indicators (KRIs) to the key performance indicators (KPIs) in the balanced score card (BSC) is a good remedy to avoid an unbalanced analysis of a company’s progress.

Risk management should not be a separate silo, a relatively isolated add-on to the day-to-day workings of the organization.

On the contrary, risk management should be intimately linked to performance management. Splitting them into different and virtually separate management systems significantly reduces the effectiveness of risk management and may have dramatic consequences.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.